Prudential Raises Stakes in Deferred Comp Race Firm offers up to 200% match to select few.
Prudential Securities has enhanced its MasterShare deferred compensation program.
The new enhancements, which go into effect Jan. 1, 2001, offer company matches of up to 200%. But top awards are available only to big producers who have grown their businesses more than 26% a year over three years (see "Prudential's Enhanced Deferred Comp Plan").
Contributions and matching awards in MasterShare are invested in a Prudential S&P 500 index fund. The program was launched a year ago, and offers reps a 25% discount on the fund - essentially a 33% match. The original program has a three-year vesting schedule; the new enhancements vest over eight years.
"The intent [of the enhancements] is to encourage our FAs to grow their business here while giving them the opportunity to attain their own personal wealth," says Sal Mazzola, senior vice president and director of administration and information services for Prudential's private client group.
"It's a great plan," says a Prudential rep in New York. "You'd have to be crazy not to buy into the S&P 500 at a discount. I have no intention of leaving, so a plan like this secures my future."
But some brokers are balking at participation, despite the enhancements. If brokers leave prior to being vested, they may forfeit their own contributions.
"The future of the firm is too uncertain for me to commit 20% of my annual salary to the plan," says another Prudential rep on the East Coast, noting management changes and the prospect of the firm going public this year. "I don't feel good about it, and I won't participate. It's obvious that they brought this out because they want to lock in brokers so they don't have so many departures."
Nevertheless, several competing firms are looking to enhance their plans as a result of Pru's move, Mazzola says, although he would not name them. "When something of this magnitude is out there, and clearly has the eye of advisers [and potential recruits], I'd expect there'd be some reaction" from competitors, he says.